Reform to private option could cost more than it produces | Arkansas Blog

Thursday, January 1, 2015

Reform to private option could cost more than it produces

Posted By on Thu, Jan 1, 2015 at 6:58 AM

The Human Services Department announced yesterday that the federal government had signed off on a couple of changes to the private option Medicaid expansion pushed by legislators hoping to make the program more to the liking of conservatives

One cut back on non-emergency transportation by limiting payments for trips to the doctor. You can still find some legislators who think this is an unfair burden on people who live in rural areas far removed from medical services providers. And they think reducing health visits can have expensive consequences. But their number has decreased substantially.

Another was the so-called "independence account." This requires poor people to pay $5 to $15 a month into a savings account to offset medical co-pays and to save for a day when they might be able to buy purely private insurance.

Legislators don't like the idea of anybody receiving something for nothing — unless you are talking about free meals and drinks served up by lobbyists daily during the legislative session. Or the state-paid health insurance lawmakers enjoy.

Legislators hope poor folks' investment in health care will make them more responsible and wise about health decisions.

A couple of thoughts: Payments are required of an individual making as little as $5,500 a year, or as little as $12,000 for a family of four. $15 doesn't seem like much money unless you are making $1,000 a month to support four people.

Then there's this simple arithmetic: It has been estimated that the cost of administering the independence accounts is $15 million, paid from state and federal money. The program will require savings accounts for 97,000 people. Even if all had to pay the full $15 every month or $180 a year — and they won't all be required to pay the full amount and many won't be able to make payments — the savings accounts would add up to about $17.5 million, not much more than the cost of running the program. Robbing Peter to pay Paul, sounds like.

Legislators have always loved to extract a little flesh from poor people before giving them alms. Much more of this is to come in the effort to sell continuation of the private option in the 2015 legislative session. You'll remember that national Republican orthodoxy is to turn all social programs into "savings accounts." In return for a tax credit for savings, poor folks would theoretically save enough from their sporadic minimum wage earnings to pile up the cash necessary to pay for their medical needs (doctors surely would cooperate by cutting fees to accommodate their hard-pressed patients). The Arkansas "independence account" is just the first baby step down that mythical path.

We already know the sum of the arithmetic. It means a reduction in government expense for health care. That means a reduction in health care for poor people. Poor people have few lobbyists.

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